Builders Say California Faces a Housing Crisis

Real estate: Fast-growing population will send prices up, hurting low-income people the most, industry group says.

Builders are putting up only about half the houses needed to accommodate California's fast-growing population, a trend that will make housing dramatically more expensive and could turn legions of families into permanent renters, says a report to be released today.

The California Building Industry Assn. found the state's swelling population--1,700 new residents each day--requires at least 250,000 houses, condominiums and apartments annually to keep pace, a figure that hasn't been reached in more than a decade.

Unless more homes are built, prices will spiral higher, forcing many young people, immigrants and low- and moderate-income families out of the market.

"This state is facing nothing short of a housing crisis," said Dennis Moresco, president of the 5,000-member trade group. "It's strictly a supply problem. The housing is not there to keep up with job growth."

The BIA study is the third in the last two weeks that highlights what housing experts believe is a growing affordability crisis in the nation's most populous state. California has the third-lowest rate of homeownership in the nation, trailing only Hawaii and New York.

The builders report found that families earning California's median income of $44,700 fall $20,970 short of qualifying for the median-priced home of $199,000. That affordability gap is up 9.4% from the $19,167 gap in 1996.

"If we were building enough homes, the median price would not be that high," said Robert Rivinius, the BIA's chief executive.

Currently, 11 of the state's metropolitan areas--including Los Angeles, Orange and Ventura counties--appear on the National Assn. of Home Builders' list of the 20 least affordable markets in the nation.

The situation will grow more severe every year over the next 25 years, Moresco said, as California attracts a projected 16 million newcomers--roughly the population of Texas.

Housing experts fear that sharply rising home prices eventually will strangle the state's booming economy.

"We are in the early signs of decay in the California economy," said Ken Agid, an Irvine-based consultant to home builders.

He expects high double-digit growth in housing prices over the next 18 to 24 months, which could cause more companies to leave for states where living costs are cheaper.

Despite the need for more affordable housing, Moresco said, an increasing number of local governments are adopting restrictive growth policies, such as limiting the number of housing units per acre, that make it difficult to keep up with growth.

When tighter restrictions were adopted in Napa County, for instance, housing production there dropped 54%, Moresco said.

City planners say their chief responsibility is to maintain quality of life and allow development that fits into a city's general plan.

"Are they suggesting that local governments should lower their standards?" asked Glen Worthington, a principal planner for the city of Irvine. "If there is not enough affordable housing, then why are they raising their prices?"

The shortage of homes is especially problematic for lower-income families.

For example, to meet the projected demand for more than 33,000 low-income units, Orange County would require $300 million to $400 million--far more than it can afford, said Dan Miller, interim director of the county's Housing and Community Development Department. His office gets about $6 million a year in federal money that goes toward developing low-income housing.

"If we can help finance 500 units in a year, we're doing pretty good," he said.